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The tax is payable on most general insurance policies including home, motor, pet, private medical insurance, and cash plans taken out by individuals, as well as commercial insurance taken out by businesses.

Will people be put at risk?

Recent research by the BIBA found 90% of insurance brokers anticipated that a further rise in the IPT will mean clients reduce their insurance protection or go without cover.

According to calculations from the Association of British Insurers (ABI), the latest IPT increase could add an extra £47 to the average household's annual general insurance bill.

It said that, overall, the new rate of IPT at 12% could now be adding an extra £283 a year to a typical household's annual insurance bill.

Drivers could beat the tax rise

The ABI estimates that a typical 19-year-old driver could see their annual motor premium increase by £20 following this latest rise.

Younger drivers tend to pay higher premiums due to the higher likelihood of their age group being involved in accidents. However, telematics or "black box insurance", which involves a small monitoring device being installed in the car, enables insurers to reward good driving with cheaper premiums.

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Kevin Pratt, consumer affairs expert at MoneySuperMarket, said: "Telematics offers a cheaper alternative to traditional policies if the driver can demonstrate he or she is a lower-risk proposition than the statistics for their demographic suggest.

"Black boxes also make the roads safer by incentivising good driving habits."

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